Gov unveils plans to reduce employment tribunal claims

Claims will be arbitrated before they reach tribunal

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The government will remove the right of employees of one year standing to make unfair dismissal claims, will allow more Employment Tribunals to sit with a single judge and could ask claimants to pay to make a claim, it has said.

Plans to reform the way that employees can make claims will also force all claims into arbitration before they can be heard by a tribunal to try to reduce the number of tribunal claims from the 236,000 that were processed last year.

Under the proposals (89-page/523KB PDF), companies could face fines if they breach the rights of employees.

Employees will no longer have the right to claim unfair dismissal after working for one year. They will only have that right after working for two years under the plans. The government said that it hoped to eliminate up to 4,700 claims through this measure.

"Disputes in the workplace cost time and money, can affect morale, reduce productivity and hold back businesses," said Business Secretary Vince Cable. "We often hear that knife-edge decisions about whether to hire new staff can be swung by concerns about ending up in an employment tribunal if things don’t work out. Today’s proposals address these concerns and should help give employers more confidence."

One of the aims of the proposals is to promote the employment of more people, Prime Minister David Cameron said.

"A critical element of the government's growth strategy is to create the conditions which allow businesses, especially smaller businesses, to flourish and expand, by reducing regulation and maintaining a flexible and dynamic labour market," said Cameron.

"[The reforms] highlight our determination to ensure that employment law is no longer seen as a barrier to growth, while making sure that employees and employers are treated fairly," he said.

The plans, which will be the subject of consultation until 20 April, say that all employment claims will have to be lodged first with mediation service ACAS (Advisory, Conciliation and Arbitration Service).

"This [proposal] also includes introducing settlement offers to encourage parties to make reasonable offers of settlement to avoid tribunal hearings and encourage parties to consider other forms of early dispute resolution such as mediation," said a statement from the Department for Business, Innovation and Skills (BIS).

The government wants to speed up the tribunals process by increasing the numbers of categories of cases that can be heard by a single judge.

"[Plans include] extending the jurisdictions where judges would sit alone to include unfair dismissal, introducing the use of legal officers to deal with certain case management functions and taking witness statements as read," said the BIS statement. "This will result in Employment Tribunal resources being used more efficiently and allow cases to be listed and heard more quickly, saving time and cost."

The consultation proposes introducing financial penalties for companies that breach the rights of their workers. "[This is] aimed at encouraging greater compliance from employers and thus a reduction in the number of tribunal cases," said the statement.

The government has also published an "employer's charter" to outline what their responsibilities are and to try to counter the impression that employment law protects only employees.

"In the business world there is ... a common misconception that employment protections are all one-way – towards the employee," said Cable. "The Charter we are publishing today tackles this myth by setting out clearly some of the most important rights that employers already have in the workplace."

The changes were opposed by Brendan Barber, general secretary of the Trades Union Congress (TUC).

"While employer groups complain that tribunals are costing them too much, they have lost sight of the fact that if firms treated their staff fairly, few would ever find themselves taken to court," he said. "Instead of making it harder for employees who’ve been treated badly at work to seek justice, ministers’ time would be better spent looking at why so many companies, especially small employers, have such poor employment practices."

Though controversial, the potential charging of a fee to lodge tribunal claims may not deter many employees from taking action, according to Leah de Vries, an employment law specialist at Pinsent Masons, the law firm behind OUT-LAW.COM.

"A fee to lodge a claim will be a popular move with employers, and an equally unpopular one with unions, but might not discourage many claims," said De Vries. "It might cause the ambivalent unrepresented employee to think twice about lodging a claim, but the no-win no-fee operators will adjust their business model to minimise the practical effect.

"Increasing efficiency in the tribunal system is the less controversial and glamorous part of today’s package of announcements. However, it is the most important," she said. "If they get this right by sifting out meritless claims, speeding up listings and reducing hearing length, it will restore the credibility of the system and increase the faith employers have in it."